How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Sam Your Own Question

Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13809
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

I live in germany and will be moving to England at the end

Resolved Question:

I live in germany and will be moving to England at the end of this year. I am separating from my wife and want to know how much of my pension will remain after tax, My German tax advisor says that according to the tax agrement between Germany and the UK income from a German annuity that I set up this year must be taxed in the UK. The rest of my pensions will be taxed in Germany. I expect to receive 52000 Euro per year 6000 Euro of which comes from the aforementioned annuity. How much tax will have to pay on this annuity?
Regards
Karl Aeberli
Submitted: 8 months ago.
Category: Tax
Expert:  Sam replied 8 months ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

If you are due to make a permanent move to the UK then -

All income that is brought into the UK will be liable to UK tax, however any of that suffers German tax will allow you to have this tax considered under the double taxation agreement between Germany and the UK.

So how much is the your combined income to be each year (that is to be either brought into OR spent in the UK) and can you also advise the amounts in sterling please.

Thanks

Sam

Customer: replied 8 months ago.
Hi Sam,
thanks for the rapid response.
With the exception of the indicated annuity all my income will be taxed in Germany according to my German tax advisor. The current exchange rate is 1 Euro equals 0.87 pounds. I would be spending half of the total income after tax in England - my wife who will remain in Germany will get the other half.
Regards *****
Expert:  Sam replied 8 months ago.

HI Karl

Yes it may well remain taxed in Germany but under the UK law and contradiction - you will have a consideration of UK tax on ALL income readmitted in the UK - and any German tax suffered will be offset against your UK tax liability.

And if half will remain with your wife - and not come into the UK then you can have some of this mitigated by asking to be considered for UK tax under the Remittance Basis (rather than the normal basis of taxation where you remin liable to worldwide income regardless of its source)

However the remittance basis - whilst it means you are only liable to tax on that income which enters the UK - this does see a loss of UK personal tax allowances (which allows the first £11,000 of income tax free) and after 7 years if you have been resident in the UK for 7 out of the last 9 years, you will then suffer a remittance basic charge of £30,000 (which increases as time goes on - see the increased charges

  • £60,000 for at least 12 of the previous 14 tax years
  • £90,000 for at least 17 of the previous 20 tax years

If however all your income comes into the Uk for you then to honour a payment back to Germany to your wife - then this income will be treated as if the income has been remitted to the UK

Thanks

Sam

Customer: replied 8 months ago.
Hi Sam,
I don`t understand what a remitttance charge is?
RegardsKarl Aeberli
Expert:  Sam replied 8 months ago.

Hi

I have advised this - IF you wish your German income (which will not be remitted into the UK) to be disregardful for UK tax purposes, then you have to ask to be taxed under the remittance basis -

And if you ask to be charged under the remittance basis, then after 7 years you are charged a remittance charge for the privilege of doing so (as everyone else under the actual basis - normal UK tax rules, is paying UK tax on their worldwide income) - so after 7 years you are charged an annual fee.

If however you are considered for UK tax on all of your income- and then are claiming credit for any German tax suffered, then you will NOT be charged the remittance charge

Thanks

Sam

Customer: replied 8 months ago.
If I understand this correctly then after the 7th year I would pay 30000 pounds annually on an income of around 20000 pounds if I wanted to be taxed on a remittance basis?
Expert:  Sam replied 8 months ago.

Hi

Yes that rights and if you asked to be taxed under the remittance basis, you also would lose your entitlement (as a UK resident) to the UK personal tax allowances from Year 1 (and this allows the first £11,000 of annual income to be free of tax)

So you either

1) Arrive in the UK and are treated the same as any other taxpayer, where you are considered liable to tax on all your worldwide income - of which the first £11,000 would be tax free - and any German tax you have suffered can be offset against the UK tax liability (as we have a double taxation agreement within the tax treaty between the UK and Germany) OR

2) If some of this German income will not be remitted to the UK (so brought in OR spent via bank card) then you might wish to consider asking HMRC to tax you under the remittance basis which

a) sees the loss of the UK personal allowances AND

b) After 7 years you are charged an annual charge called the remittance charge

I hope this makes n=more sense now. Let me know if I can assist further. However, if you have all that you need, then it would be appreciated if you could rate me foe the time and level of service I have provided (or click accept) This ensures Just Answer credit me for my time

Thanks

Sam

Customer: replied 8 months ago.
Surely 2) makes no sense as after 7 years I would pay annually more tax than my UK income??
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response

Its HMRCs way of deterring those that plan to stay for a long time in the UK (or even settle here permanently) from taking advantage of this remittance of certain incomes as its really designed for those that may only stay in the Uk for a short time, and have income that remains arising out of the UK

But I do not make the rules the UK government do - I am just using my expert knowledge to advsie you of your two considered positions within the UK tax legislation.

Thanks

Sam

Customer: replied 8 months ago.
Hi,
so perhaps we should consider my case rather than the general case. Here the numbers:
see attached
So how much UK tax do I pay?RegardsKarl
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response

If you wish me to work out your specific case then I am afraid this will involve me having to offer you an additional service as per Just Answer policy and this will incur an additional charge. But I must advsie this will be factual information only and NOT representation as to how you should proceed as this is an information side and we cannot represent you l Let me know if you would like me to proceed and I can send an additional free request for additional work

Thanks

Sam

Customer: replied 8 months ago.
Please proceed
Expert:  Sam replied 8 months ago.

HI

I just need the following additional information

1) is the private health insurance an income that will be paid to you

2) will you be paid income first and then pay your wife from the income paid to you

3) Will both of these sources of income be paid into the UK and spent in the UK

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13809
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
1) no, this is paid by me to the health insurance company to ensure health cover
2) yes
3) basically the money will be paid in Euro and I will transfer my wife's part to her in Euros. The rest I will transfer to a UK account since I intend to live in the UK
Expert:  Sam replied 8 months ago.

Hi

Thanks for your response

Then we have the full £44363 to be considered for UK tax purposes - the health cover has no bearing on the tax position (as there is no tax relief due on this payment) and as you will pay your wife from your income - this also will have no bearing on the UK tax position

And as you have provided me with the income is one lump sum - I cannot work out the remittance basis for you - I can only advise the normal taxation basis.

So income of £44363 -

Less UK personal allowances £11,000

Leaves £33363 liable to UK tax

First £32,000 at 20% = £6400

Remaining £1363 x 40% = £545.20

Total UK tax due £6945.20

From which you will have suffered £4602.30 German tax which can be offset against the UK tax position so

£6945.20 less German Tax suffered £4602.30 leaves you will a UK tax liability of £2342.90

When you arrive in the UK you will need to apply for a UK National Insurance Number (as this will be needed to register with HMRC for the filing of UK tax returns)

After each 5th April you will be required to complete a self assessment tax return to declare all your foreign income and the German Tax suffered.

Then any tax you owe (after the German tax has been considered) will be paid to HMRC no later than the following 31st Jan

So if you arrive in 2016 - then after you have registered with HMRC for self assessment come 05/04/2017 you will ned to complete a UK self assessment tax return to declare all German income (for the period of when you arrive to 05/04/2017 only - as the year you arrive will be a split year) then any tax owed you will pay no later than 31/01/2018

I have added a link here

1) How to apply for a UK National Insurance Number https://www.gov.uk/apply-national-insurance-number

2) How to register for self assessment with HMRC https://www.gov.uk/register-for-self-assessment/not-self-employed

Let me know if I can assist further

Thanks

Sam

Customer: replied 8 months ago.
Thanks this is helpful.
My wife and I are legally separated - does this have any effect?
How would you like me to specify the income rather than a lump sum? What details do you need?
The German tax year ends on the 31st December. How would I be expected to specify the German tax until the 5th of April?
Regards
Karl
Expert:  Sam replied 8 months ago.

Hi Karl

Thanks for your response

No your separation does not affect your UK tax position at all

I do not need your income split - it was you that advised that some of it was liable to tax in German and some not - but my calculations take the UK tax position only into play (plus the overall German tax suffered)

And if you wish me to look at the remittance basis (which I am happy to do) then I need you to list each income source and the gross amount that relates to that source and also any tax that would be paid in Germany on it and whether it will or will not be remitted or spent in the UK

However I will now not be able to reply this tomorrow as we have been communicating on and off all day and I need to have some down time before an early night as a 4am start to travel to clients in the morning so may not reply until later tomorrow afternoon if thats acceptable

Thanks

Sam

Customer: replied 8 months ago.
No Problem - I will answer you tomorrow
Expert:  Sam replied 7 months ago.

Hi Karl

Lovely - I will await the breakdown of what will and will not be spent/remitted into the UK - and will answer thus later today

Thanks

Sam

Customer: replied 7 months ago.
Hi,
attached the break down. I am not sure how to assign the tax to each income source since the taxable income is summed up, the basic remittances subtracted and the tax then calculated. I can find out these remittances if you want but I have to ask my German tax advisor (she is not as quick as you!). Basically half of the money after tax is be used in the UK (lets say 19000 pounds for this calcalation) - the other half going to my wife in Germany.
RegardsKarl
Expert:  Sam replied 7 months ago.

Hi

I need the breakdown of tax I am afraid or I cannot work this out.

And its irrelevant that your wife will get half - its whether you remit this share into the UK at all - and I just need to know from you what will come into the UK and what wont, and of the amount that does how much German tax will arise

Thanks

Sam

Customer: replied 7 months ago.
Hi
I am not getting this. Obviously the money I pay my wife will stay in Germany.
The premise is: The money that I transfer to the UK should equal half of my pension after deducting all taxes and I will live in England permanently.
Since the German tax rate is on a sliding scale I can think of no way of allocating it to the split other than dividing it in two, i.e. 4602/2 = 2301 pounds. But instead of transferring half of my brutto income (44364/2 =22182) to the UK I would actually fransfer 44363/2 -2301 = 19881 pounds to the uk since that is what I receive after German tax (actually the amount of UK tax would have to be compared with the german tax to achieve an accurate split). This begins to look complicated but perhaps I am being dense.
Regards
Karl
Expert:  Sam replied 7 months ago.

Hi

I understand and all I can do is estimate the remittance basis in this scenario (the figures will not be exact

So to recap the actual basis (taxed on your worldwide income saw you having an additional tax liability of £2342.90 (after the full German tax considered)

This way - you would be considered on £22182 - and as you would not be entitled to UK personal allowances (although at this stage NOT charged the remittance basis charge for the first 6 years of residency in the UK)

So £22182 x 20% = £4436.40 less the estimated German tax of £2301.00 would see you having a further £2135.40 liability in the UK - so you would be £207.50 netter off by electing for the remittance basis for the first 6 years, but then changing to actual basis in year 7 (2022/2023 tax year)

Thanks

Sam

Customer: replied 7 months ago.
Ok this is clear if somewhat depressing. Am I right in assuming that Pensions or Annuities do not get tax relief in the UK?Regards
Karl
Expert:  Sam replied 7 months ago.

HI Karl

Yes you are right - all pensions and annuities are treated as taxable income in the UK regardless of their treatment in their originating country

Thanks

Sam

Customer: replied 7 months ago.
Hi Sam,many thanks for all your help. You did an excellent job!
RegardsKarl Aeberli
PS. Is there any way of printing this correspondence?
Expert:  Sam replied 7 months ago.

Hi Karl

You are very welcome

You will need to copy and paste into a word document I am afraid!

Thanks

Sam

Customer: replied 7 months ago.
How do I rate you? It just says "you rated 5 stars" at the top and I haven't yet?
Expert:  Sam replied 7 months ago.

Hi

You have already paid (as you accepted the additional Q & A time which also then accepted the initial payment) - so you are all done - please do not rate again or you will be charged a second time

Thanks

Sam

Customer: replied 7 months ago.
I didn't rate you at all! However if I had I would have given you 5 stars so no damage done.
Expert:  Sam replied 7 months ago.

Hi

Thank you!

Sam

Customer: replied 7 months ago.
Hi Sam,
my German tax consultant seems to have a problem with your explanation so I looked at the "Avoidance of Double Taxation" law in Internet (excerpt article 17 see attached). As I understand it, it seems to imply that certain types of pensions are only taxed in the source country (Germany in my case). Subsection 2 seems to apply to my state pension and subsection 3 to my company annuity.Please let me have your comments.
RegardsKarl Aeberli
Expert:  Sam replied 7 months ago.

Hi Karl

Yes you are taxed in Germany but then as you will be living in the Uk and

remitting this money to the UK you will have to be considered on this income fro UK tax purposes

I advised this in my first answer when I stated "All income that is brought into the UK will be liable to UK tax, however any of that suffers German tax will allow you to have this tax considered under the double taxation agreement between Germany and the UK."

Is your German tax consultant familiar with UK tax law ? As that is all I can advise on - and I worked for HMRC for 26 years and since 2009 run my own accountancy firm and ALL remitted income regardless of its source, its tax position in its originating country or whether foreign tax has been suffered is LIABLE to Uk tax - its just any tax suffered in its originating country is then credited to you.

To back this up - link here from HMRC (this is the simplistic advise)

https://www.gov.uk/tax-foreign-income/overview

Thanks

Sam

Customer: replied 7 months ago.
Hi Sam,
thanks for the prompt answer. I think that what I am wondering about is the phrase "shall be taxable only in that state" in Arrticle 17 subsections 2 and 3 of the "Avoidance of Double Taxation" law. This seems to imply to me that it cannot be taxed in another state i.e. the UK in my case. Sorry to belabour this point but the outcome has serious implications on where I spend my retirement.RegardsKarl
Expert:  Sam replied 7 months ago.

Hi

Thanks for your response

I have advised fully on how the UK will treat your incomes - I cannot advise beyond that

ANY income that is remitted to the UK is considered within the UK taxation regime, whether a pension or state pension

What the treaty actually means is that your country has first consideration of any tax position.

For example any UK citizens or leave the UK remain having to have their tax position managed here in the UK with their state pensions and some governmental pensions HAVE to have the UK tax position considered here first and foremost but they still are considered within the new countries tax jurisdiction (less any UK tax suffered) but that does NOT negate the need for the country of residence to consider this income

Thats all I can advsie as NO income is ignored by HMRC - I am sorry I cannot comment further

Thanks

Sam

Customer: replied 7 months ago.
I think that you should read this link:
https://www.gov.uk/hmrc-internal-manuals/double-taxation-relief/dt7909

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions